From Texas, I mostly cover the energy industry and the tycoons who control it. I joined Forbes in 1999 and moved from New York to Houston in 2004. The subjects of my Forbes cover stories have included T. Boone Pickens, Harold Hamm, Aubrey McClendon, Michael Dell, Ross Perot, Exxon, Chevron, Saudi Aramco and more. Follow me on twitter @chrishelman.

4/03/2012 @ 3:38PM58,929 views

How A Dumb Law Blocks A Great Way To Fuel America

This year American motorists will burn through 14 billion gallons of ethanol, the end product of 5 billion bushels of corn—a third of the U.S. crop—grown on 33 million acres of farmland. It arguably cuts pollution coming out of U.S. tailpipes, but at a huge cost. Since 2005, when Congress required that ethanol be added to your gas tank, U.S. corn prices have tripled.

Steven Sterin thinks he has a better way. As president of the advanced fuels division at Dallas-based chemicals company Celanese, he’s supervising construction of two new plants—one in Texas, the other in China—to make ethanol. But you won’t see any vats fermenting corn here. Celanese makes its ethanol by tearing apart and recombining the hydrocarbons found in plentiful natural gas or coal. “We have the best gas-to-liquids and coal-to-liquids technology in the world,” he says. If it works, what Sterin is building will revolutionize the fuel industry. But that’s a very big if.

The problem isn’t science. It’s Washington. Thanks to the 2007 Renewable Fuel Standard law, gasoline refiners are mandated to blend so much plant-based or renewable ethanol into the gas supply that it prevents Celanese or any other fossil-fuel-based ethanols from even competing for the market. Though the RFS caps the blending of corn ethanol at 15 billion gallons a year, it calls for total biofuels blending to grow to 36 billion gallons a year by 2022.

Cellulosic ethanol is supposed to make up most of the difference. Maybe you recall President George W. Bush’s 2006 State of the Union address, in which he declared his goal that cellulosic ethanol made from “wood chips and stalks or switchgrass” would be “practical and competitive within six years.” RFS mandated 100 million gallons of cellulosic for 2010, 250 million for 2011 and 500 million this year.

But that hasn’t happened, even though the feds under both Bush and Barack Obama pumped $1.5 billion in grants and loan guarantees into upstart cellulosic producers. Most, like Range Fuels, Cello Energy and E3 BioFuels, have ended up bankrupt. Survivors like Abengoa Bioenergy produced fewer than 6 million gallons last year.

Amazingly, gasoline refiners are still on the hook. For failing to blend into their mix the mandated quantities of a fuel that does not exist, the refiners have gotten a $10 million bill from the Environmental Protection Agency to pay for their so-called waiver credits. They’re appealing.

The corn-dominated ethanol lobby is conflicted about making ethanol out of fossil fuels. On one hand, corn growers don’t want competition from cheap gas. On the other, it’s in the national interest to cut oil imports. “We’re supportive of expanding all renewables and all alternative fuels,” says Matt Hartwig, spokesman for the Renewable Fuels Association. Says Joe Cannon, president of the Fuel Freedom Foundation: “We need every option. There are 2 billion people moving from bicycles to mopeds to cars, and that’s just in India and China.”

Thirteen congressmen led by Pete Olson, whose district around Houston, Tex. encompasses dozens of chemical plants, including Celanese, have introduced a bill to add natgas-derived fuels to the RFS. Any change would face attack from the greens but is supported by animal farmers who want cheaper feed corn. “We would prefer not to have the RFS at all,” says a spokeswoman for Olson, “but this is a step in the right direction.”

How did Celanese get into this business? For 30 years it has been perfecting the process of making acetic acid—more commonly known as vinegar—a chemical feedstock for plastics like vinyl acetate. The company makes a quarter of the world’s supply at giant complexes like those in Nanjing, China and Clear Lake, Tex. The building blocks for these chemicals are cheap natural gas (Texas) and plentiful coal (China). Using steam and catalysts like nickel, Celanese breaks apart the hydrocarbons in these feedstocks and ­reforms them into acetic acid. When coal is used, the gasification process captures bad stuff like mercury and cadmium.

Vinegar and ethanol are closely related. Ethanol is the stuff in a bottle of wine that gets you drunk; vinegar is what the ethanol turns into when you leave the bottle undrunk for too long. Air oxidizes ethanol into vinegar by pulling off its hydrogen atoms. In simplest terms, what Celanese does is reverse the process, taking the acetic acid components it already makes and using metal-based catalysts to add hydrogen to it to form high-purity ethanol. Finding the right catalysts was the real breakthrough.

And while using fossil fuels means emitting carbon dioxide, it’s not clear that corn ethanol is more carbon-friendly. A 2010 study by researchers at Rice University found no reason to believe that the process of planting, tending, harvesting and processing corn into ethanol emits less carbon dioxide than does gasoline.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

——-” A 2010 study by researchers at Rice University found no reason to believe that the process of planting, tending, harvesting and processing corn into ethanol emits less carbon dioxide than does gasoline.”———

It is not a problem of emiting CO2. Every single atom of carbon in an ethanol fuel is produced from a plant(biologic) source. In order to have an atom of carbon in the fuel, the plant had to get it from the atmosphere in the form of CO2—-then use photosynthesis to produce glucose. When the fuel is burned, the carbon returns to the atmosphere as CO2 and the process begins again. The fuel is “renewable” because the carbon is recycled endlessly. This is the natural Carbon Energy Exchange Cycle. The Carbon Energy Exchange Cycle has been the basis of life on earth for hundreds of millions of years.

Fossil fuels dug or pumped out of the ground, such as coal, oil or natural gas put new carbon into the atmosphere that was not there before. With no balancing plant life to remove the carbon—-atmospheric CO2 rises.

It is impossible to raise atmospheric CO2 using biofuels. In order to have biofuels, you must have plants—–if not, the plants are not living, and you have nothing to make biofuels out of. CO2 is removed from the atmosphere and burning fuels restore the carbon at the same rate. The system is in net balance.

I see no advantage to making ethanol from fossil natural gas or coal. Sure it CAN be done—–but that does not mean it SHOULD be done. It is a very wasteful way to make energy——wasteful of energy. It requires enourmous energy inputs in the for of outside energy inputs. And there is no gain in any other benefit—-it would only exacerbate the rise of atmospheric CO2. Stupid idea. Wasteful and expensive.

We can use methane(natural gas) to power our vehicles directly. Straight forward, and efficient. And already costing about 40% of the cost of using gasoline. And there is no added expense of converting to something else, PLUS the added CO2 from the energy to make the conversion.

The only one to benefit in any way from this idea is Celanesse Corp.

Now, if Celanesse were to produce ethanol or diesel fuel from wood(which also uses the Fischer-Tropsch process you were describing)——it would be a different story. Forget the coal and fossil natural gas feedstocks—-the same process can produce the same results from any source of carbon—wood, trash, anything. And it would fit right into the natural Carbon Energy Exchange Cycle.

I’m all for Celanesse using the process to produce ethanol and becoming very profitable. Just use waste wood, agricultural waste, switchgrass, used paper/cardboard—–just about anything except fossil fuels. Do that, and it is a renewable energy—-good for the earth and good for people.

———” . Every corn ethanol plant in the U.S. is dependent upon fossil fuels. Many of those BTUs in corn ethanol trace directly back to the natural gas-derived nitrogen fertilizer.”———-

Corn has been grown for thousands of years without fossil fuels.

Corn grown with tractors running on biodiesel would be no different in the Carbon Energy Exchange Cycle than corn grown using mule drawn plows. Corn carried in trucks running on biodiesel would be no different in the Carbon Energy Exchange Cycle than carrying the corn to market in ox drawn carts.

Methane made from sewage or any other biomass is CH4—exactly the same thing as the methane in fossil natural gas. Any done or made with fossil natural gas can be done or made with biomethane—-over and over and over again.

Using biofuels to drive tractors, trucks or anything else has the same effect on the carbon balance of the natural system as riding a horse or driving a team of oxen.

Making ethanol does not raise atmospheric CO2—-that is impossible for the reason I stated above. Burning fossil fuels is the only way to raise atmospheric CO2.

Here is a thought experiment, Fred. How much corn would be grown today without the use of fossil fuels? I think it would be a fraction of what is actually grown, and hence the ethanol produced would be a fraction of what it is. Thus, natural gas is already enabling the production of large amounts of ethanol. That is fact. Whether one can grow corn without fossil fuels is irrelevant since we aren’t doing it. We don’t know how much we could grow without fossil fuels.

My question would be what fuels do the farmers use to produce the corn? Most farm tractors use diesel fuel and to me producing corn for a lower emission fuel while using a higher emission fuel gains nothing.

Petroleum diesel is what raises atmospheric CO2. Biodiesel does not raise CO2—because the carbon in the fuel was removed from the atmosphere(by the plants it was made from—and oxygen was put into the atmosphere). When the fuel is burned, the carbon goes back into the atmosphere, and is taken out again by the plants as they grow.

It is an endless cycle—-like a merry go round. The plants use energy from the sun to break down CO2 into sugar and oxygen—-animals use the stored solar energy to live, they “burn” the fuel—and produce CO2. You are alive because plants provide you with fuel “stored solar energy”, and oxygen to burn the fuel with which releases the solar energy.

When a tractor is run on biodiesel fuel(made from plants)—-it is the same result on the Carbon Energy Exchange Cycle that feeding a horse hay and grain has—-and then you making use of the energy in the hay or grain by riding the horse.

Diesel engines can run on biodiesel fuel with no modification at all. The first diesel engine that Rudolf Diesel built in 1893 ran on peanut oil.

“Petroleum diesel is what raises atmospheric CO2. Biodiesel does not raise CO2—because the carbon in the fuel was removed from the atmosphere(by the plants it was made from—and oxygen was put into the atmosphere). When the fuel is burned, the carbon goes back into the atmosphere, and is taken out again by the plants as they grow.”

The part you are leaving out of that equation is whether fossil fuels are being used in the process, and how much. If 1 BTU of fossil fuel is used in the creation of 1 BTU of biofuel, then indeed the biofuel is putting just as much carbon into the atmosphere as if we had burned the fossil fuel. And all biofuels are dependent on fossil fuels to some extent, hence all biofuels result in at least some carbon into the atmosphere.

In Brazil, ethanol is made from sugarcane. The farm equipment runs on ethanol(ethanol can power diesel engines as well as otto cycle engines………Scania has been running a fleet of over 1,000 buses for several years now).

The bagasse(the waste part of the cane after the sugar juice is squeezed out)—-is dried and burned to provide electricity to run the sugar mills and ethanol distilleries. This produces about 25% to 30% more power than is need, the rest is fed into the national electrical grid. The resulting ash is mixed with water to create a slurry that is sprayed onto the fields after harvesting to fertilize the fields.

There is no need to use petroleum at all. The same operation provides ethanol, electricity and fertilizer and fuel to run the operation.

We do know – a lot less. The majority of corn crops grown in the US are variants bred to have an output far greater than natural seed. As I recall from “The Omnivore’s Dilemma” it was about 2x as many bushels per acre and absolutely required petroleum-based fertilizers to support its nutritional needs.

I’m strongly in favor of alternate fuel development but ethanol blending has been a loser. I’m also confused what fuel blending has to do with this company. There’s no benefit I can see in making ethanol from petroleum if it’s going to be blended.

The only one I can imagine is if it allows us to create a fuel that can be burned in existing vehicles where most of the energy input comes from natural gas or other cleaner & less limited fuels. So if 20% of the energy content of that ethanol came from oil and the other 80% was sourced from gas then there’s some payoff there.

But it seems a pretty small payoff. You can already do propane conversions on vehicles if that’s what you want to run off of, rather than this method which only displaces 10% of the gasoline consumed. Above that mixture you start to see engine damage you wouldn’t get otherwise.

This seems more like a system for creating ethanol for other non-transport uses. Which is fine, but then why all the other stuff in the article?